Vivian Law Firm PLC
496 W. Ann Arbor Trail, Suite 102
Plymouth, MI 48170

Call: 734-446-0340

4 Ways to Improve Your Credit After Bankruptcy

There is no way around the fact that if you file for bankruptcy, you will see a negative impact on your credit score.  Because of this, it’s important to know exactly how your credit score is being affected. This is significant because your credit score is what lenders rely on to determine how risky it is to loan you money.  And the extent to which bankruptcy affects your credit score depends on what number your credit score was to begin with.

Filing for bankruptcy is by no means a financial death sentence. Bankruptcy protection is designed to provide people and companies with a way to pardon some of their debts and start over.  The two most common types of personal bankruptcies are Chapter 7 and Chapter 13.  Chapter 7 bankruptcy stays on your report for 10 years, and Chapter 13 bankruptcy stays on your credit report for seven years.  Don’t think you are doomed to bad credit for 7 or 10 years because it will likely affect your credit score less and less as times goes on.  This is due to the fact that many scoring models focus more on recent credit behavior rather than past behavior.  Not surprisingly, rebuilding your credit score is one of the very first steps you can take in order to reboot your financial status while you wait for the bankruptcy to drop off your report.

Acquire Credit.  Apply for a secured credit card that is backed by a cash deposit.  Compare interest rates of various cards and select the one that has the lowest annual fee and interest rate.  

Pay Off Your Balance in Full Every Month.  Prioritize on-time bill payments before any nonessential spending.  This will demonstrate to creditors that you are not at risk, and will have a significant impact on your credit score.

Avoid High Credit Utilization.  Keep your debt balance to about 20% or less than your credit limit.  Utilizing a large amount of your available credit may signal that you’re in financial trouble, which can result in a lower credit score.

Continue to Monitor Your Credit Score.  Pull your three reports each year to check for any erroneous information, and clarify any misinformation you find.

It is crucial that you take the necessary steps to reinvigorate your financial health after bankruptcy.  The experienced bankruptcy attorneys at Vivian Law Firm can help you recover from bankruptcy and lead you on the way to a successful financial future.  Contact us today for a free consultation!

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